The Attorney General of Anguilla v The Anguilla Electricity Company Ltd
| Jurisdiction | Anguilla |
| Judge | ‘Innocent J.’ |
| Judgment Date | 08 April 2020 |
| Neutral Citation | AI 2020 HC 10 |
| Court | High Court (Saint Christopher, Nevis And Anguilla) |
| Docket Number | CLAIM NO. AXAHCV 2019/0063 |
| Date | 08 April 2020 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(CIVIL)
A.D. 2020
CLAIM NO. AXAHCV 2019/0063
Mr. Dwight Horsford, Honourable Attorney General, with him Ms. Erica Edwards for the claimant
Mr. Frank Walwyn, with him Mr. Chesley Hamilton and Mr. Carlyle Rogers for the 1 st, 2 nd, 3 rd, 6 th, 7 th & 9 th named defendants
Company Law — Public limited company — Claim for oppression and unfair prejudice — Companies Act, R.S.A c. C65, section 268 — Whether the affairs of the corporate entity have been conducted in a manner that is oppressive and unfairly prejudicial to majority shareholders interest — Board of Directors — Failure to convene annual general meeting — Section 106 (3) of Companies Act requiring convening of annual general meeting within 15 months of last annual general meeting — Whether section 106 (3) of the Companies Act mandatory — Whether tenure of Board of Directors expired by operation of section 106 (3) of the Companies Act — Whether failure to convene Annual General Meeting within time prescribed by section 106 (3) of the Companies Act resulting in the directors ceasing to have any authority to conduct the business of public corporate entity — Whether board of directors lawfully constituted — Whether directors had automatically vacated office — Whether court should intervene to direct convening of Annual General Meeting — Whether alternative remedy available to claimant under the Companies Act to rectify the default in convening the annual general meeting
This is a claim brought by the Honourable Attorney General of Anguilla (the Attorney General) seeking relief pursuant to section 268 of the Companies Act Revised Statutes of Anguilla C.140 (the Companies Act) wherein the court's intervention is sought to resolve what the Attorney General describes as oppressive, unfair and prejudicial conduct on the part of the Board of Directors of The Anguilla Electricity Company Limited (ANGLEC).
The Attorney General brings this claim on behalf of the Government of Anguilla (‘the GOA’) in its capacity as a member of ANGLEC, who holds a controlling interest in the share capital of ANGLEC, being the majority shareholder of 79% of the shares in ANGLEC.
ANGLEC is a public limited liability company, incorporated under the Companies Act and is the only licensed electricity supplier in Anguilla. Its affairs are controlled by a Board of Directors elected by the shareholders of ANGLEC.
The second to ninth named defendants constitute the Board of Directors of ANGLEC (‘the Board of Directors’) which is chaired by Mr. Harold Ruan (‘Mr. Ruan’). Mr. Ruan was first appointed a director in July 2000. He was re-elected in 2008 and retired in September 2011. Mr. Ruan was again elected Chairman of the Board of Directors on 30 th October 2015 and continued to serve as Chairman until 11 th November 2016. Thereafter, subsequent to the annual general meeting of February 2018, Mr. Ruan resumed his position on the Board of Directors as its Chairman and continues to hold that office which he claims is by virtue of the decision taken at the annual general meeting held on 15 th February 2018 and affirmed at the Special Meeting of 16 th April 2019. Mr. Ruan, Ms. Dawnette Gumbs (‘Ms. Gumbs’) and Mr. Erville Hughes (‘Mr. Hughes’) are the longest serving members of the Board of Directors. Mr. Hughes resigned from the Board of Directors in November 2019.
The pleaded case of the GOA is concerned with the conduct of the Board of Directors since the holding of the last annual general meeting on 5 th February 2018 and which was adjourned and concluded on 28 th August 2018. The GOA alleges that the Board of Directors have egregiously and flagrantly breached the provisions of the Companies Act and the By-laws by failing to convene an AGM within the period prescribed by section 106 (3) of the Companies Act and to timeously provide to and lay before the shareholders, ANGLEC's audited financial statements. As a result, the GOA contends that the Board of Directors who were to be rotated out of retirement on an annual basis coupled with their failure to convene an AGM was calculated to unlawfully perpetuate the existence of the present Board of Directors whose tenure had expired by operation of section 106 (3) of the Companies Act.
Therefore, the GOA contended that by virtue of the Board of Directors tenure having expired by virtue of section 106 (3) of the Companies Act 1 the Board of Directors ceased to have any lawful authority to conduct the business of ANGLEC as of 29 th November 2019 when their tenure expired.
The last AGM of ANGLEC was held on 28 th August 2018. By virtue of section 106 (3) of the Companies Act, ANGLEC was required to hold its AGM at intervals of no more than 15 months. Article 12.1 of ANGLEC's By-Laws provides that:
“The annual meeting of the shareholders shall be held on each day in each year and at such time within Anguilla as the directors may by resolution determine.”
At a previous AGM held on 5 th February 2018, the shareholders and members approved a motion to forgo the election of directors and resolved that the three longest serving directors would retire automatically by rotation at the end of their three year tenure, at the next annual general meeting. At a special meeting requisitioned and convened by the GOA pursuant to section 121 (1) of the Companies Act on 16 th April 2019, the GOA proposed that the following resolution be put to the shareholders:
“To consider and if thought fit, to pass with or without modifications(s), resolutions to remove the board of directors and to elect suitable persons to fill the vacancies.”
At the special meeting the proxy for the GOA proposed a modification to the resolution in its original form to remove specific directors. The proposed resolution in its modified form was not accepted. The shareholders voted instead to uphold the decision taken at the previous AGM held on 5 th February 2018.
Article 4.6 of ANGLEC's By-Laws provides:
“Unless the tenure is sooner determined, a director shall hold office for a period of three (3) years.”
Article 4.6.1 of ANGLEC's By-laws provides:
“At each annual general meeting one-third of the directors for the time being, or if their number is not three or a multiple of three then the number closest to one-third, shall retire from office. The directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who become directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.”
Article 4.6.2 of the By-laws provides:
“The shareholders may, by resolution, extend the tenure of any director appointed prior to the adoption of these By-Laws until such time as they become eligible for retirement by rotation pursuant to By-Law 4.6.1 above.”
The GOA's contention is that the AGM should, at the latest, have been held on 29 th November 2019. In fact, no meeting was held in 2019. The reasons for the failure to convene the AGM was a matter of dispute between the parties. The GOA complained that the Board of Directors had failed to finalise and publish the audited financial statements for the financial periods 2017 and 2018. The Board of Directors claimed that it was not possible to finalise the audit of ANGLEC's accounts for presentation at the AGM because of certain unforeseen events beyond the control of the Board of Directors including acts of God, particularly the occurrence of Hurricane Irma in September 2017.
Prior to the last annual general meeting held on 5 th February 2018, ANGLEC's previous annual general meeting was held on 10 th November 2016. The annual general meeting of 5 th February 2018 was adjourned twice, that is, to 26 th February 2018 and 28 th August 2018. There has been no annual general meeting convened since then.
In the present proceedings the GOA has claimed the following reliefs, namely:
-
1. A Declaration that the tenures of the directors have expired by operation of section 106 (3) of the Companies Act and consequently the Board of Directors of ANGLEC is vacant.
-
2. A Declaration that no later than 29 th November 2019, the said directors ceased to have any or any relevant authority to conduct or transact or approve the transaction of any business of ANGLEC.
-
3. A Declaration that the affairs of ANGLEC have, since 28 th August 2018 been conducted in a manner that is oppressive and unfairly prejudicial to the GOA as a shareholder and member of ANGLEC by virtue of the directors' continued violation of the mandates of the Companies Act relative to the convening of the annual general meeting and financial disclosures.
-
4. An order pursuant to section 268 of the Companies Act regulating the affairs of ANGLEC in relation to appointing the date, time and place of the AGM.
Previously, the GOA had sought an interim injunction that the directors be restrained from continuing, purporting or proceeding to conduct or transact or approve the transaction of any business of ANGLEC until final determination of the claim. The interim relief was granted by the court for the purpose of preserving the status quo until the court determined the issues in contention between the parties.
The court has been asked to determine the following issues, namely:
-
1. Whether the directors of ANGLEC as of 5 th February 2018, are deemed to have retired as directors on the 29 th November 2019, the last annual general meeting of ANGLEC having taken place on 28 th August, 2018.
-
2. If so, were the directors...
To continue reading
Request your trial